As a buyer in Los Angeles, faced with extremely low inventory and high demand, you need to do the hard work internally to really understand if you are emotionally, mentally and financially ready to be a homeowner. Those who are ready and able to buy now are those who understand that this is a competitive market. Here's the reality - many (if not most) properties are selling not only for over the asking price, but also over the appraised value. That's right folks, let me emphasize that... people are actually buying houses at a price that is higher than what the appraiser tells them it is worth! Especially the ones that are well designed and beautifully staged.
Home buyers who are getting into homes and outbidding the competition today recognize that this is a sellers market, they are willing to accept that reality & be competitive.
Will you possibly be “overpaying” based on current comps? Maybe. But why do buyers in this market do it anyway? Because they want to be a homeowner instead of a renter! That price (no matter what one might think as inflated) goes toward THEIR asset. Will they have to spend money on things like a roof, water heater, appliances? Absolutely. But all those things are theirs. They are paying into an asset and on top of it getting use out of that asset; it's their home, to live in, to improve, to do whatever they want with. They are not making a landlord rich, but building equity and increasing their own net worth...over time. They also realize that regardless whether or not the real estate market goes up or down, they are willing to commit to being a homeowner and all the work, rewards and risks that come along with it.
We've heard it said before like this... "there's never a bad time to buy, only a bad time to sell". Why is that? Because the market will set the price of what a property sells for, and you choose what you can afford and work with the market you are in. If you can afford your mortgage, and don't plan on moving within a few years, then it doesn't really matter how much you've chosen to pay for it. The market goes up and down, but also you have control over a lot beyond just what the market is doing through making smart updates to add value to your property. The only time the price that comparable homes are going for matter is when you are trying to sell your home, but if you are not planning on buying and then selling quickly, then you can be confident about purchasing a home at the market price.
We've seen buyers take on the mentality of “this is what I think this house is worth” when in reality that price is set by demand, not anyone's opinion. Buyers who stick to that mentality are simply not ready to buy in this market. Yes, there are no guarantees, on literally anything, but sometimes you have to take a calculated risk, overcome fear, and not see a home like a stock or purely a financial vehicle in order to have the right mentality to become a homeowner.